Article: Latest Changes May Not Fix Qantas’ Reward Availability Problem

[WilsonM]

But these anecdotes aren't supported by data. The number of points redeemed annually has increased by 10% in the last year and 27% since 2019. The number of members has increased similarly.

Is this points redeemed on flights, or simply points redeemed? I note in your analysis you've pointed out that points redeemed per member has remained pretty stable since 2019, which makes perfect sense - your stats are right.

But if members are not able to redeem for Classic Rewards, they'll end up spending their points on other products (points+pay, C+, or non-flight products). From this, I don't get how the statistic of "points redeemed per member is similar" can be used refute the premise that there isn't enough Classic Reward availability. The fact that there are more points redeemed in the program overall also doesn't really refute that, for the same reasons. I'm sure there's many people who have points sitting in the account, who want to use them for flights - but they couldn't find availability, so they burned them on a non-Classic Reward redemption. It wouldn't change any of the stats you mention, but it still doesn't mean they found Classic Reward availability.

I just don't think there is enough conclusive evidence, number based or otherwise, to go beyond the anecdotal. Mainly because Qantas won't ever release a proper breakdown. As someone who stares at the Qantas website for multiple hours at least three days a week, I'd personally say I'm seeing less availability than before. Of course, this is purely anecdotal and not backed up by statistics.

Is it impossible to find availability? Definitely not, and I make the program work for me. But I'm also definitely not representative of the average traveller and it would be ridiculous for me to say that it works for everyone as a result.

 

[big_RED]

I've just realised how outrageously different the new CR+ forced upon program will be for my scenario and how I use my QFF points.

Before with CR: SYD to DFW return Business was 253,000 + $800 in taxes. 506k and $1,600 for my wife and I total.

New age: CR+ is 2,500,00 total for two passangers and $2,800 in taxes. Literally 5x more expensive now.

Even premium economy in CR+ is ~950,000 points! So double, for a lower class.

Quite unbelievable.

 

[SYD]

I've just realised how outrageously different the new CR+ forced upon program will be for my scenario and how I use my QFF points.

Before with CR: SYD to DFW return Business was 253,000 + $800 in taxes. 506k and $1,600 for my wife and I total.

New age: CR+ is 2,500,00 total for two passangers and $2,800 in taxes. Literally 5x more expensive now.

Even premium economy in CR+ is ~950,000 points! So double, for a lower class.

Quite unbelievable.

Except CR+ will vary with the cash price at the time. In some scenarios, the CR+ points are less than a CR during a Sale.

BUT AFAIK, no such situation has manifested for flights to the US. So far, only sale fares to NZ (probably because TT CRs in J are disproportionately expensive)….

 

[marki]

Article From AFR: Three ways to win with Qantas’ frequent flyer overhaul.
Qantas frequent flyers will need to spend more points to travel than they used to – the main takeaway from the airline’s overhaul of its loyalty program, announced last week.

Of course, any program built on loyalty does well to offset the sour with the sweet. And this latest shake-up comes with a few wins to make the losses more palatable.

One could see this in the rearview mirror miles away, but I am still surprised. Points are just a little more worthless.

1 No More Tier caps: a Platinum member flying in a business class seat from Sydney to Los Angeles will now earn 25,594 points in the sky, up from 21,375.
2. Finnair, Air France, KLM and Iberia will expand to offer premium economy reward tickets for the first time. Members will also say aloha to Classic Reward seats on the Hawaiian airline.
3. Classic Reward seats are released 353 days in advance to Gold frequent flyer members, 323 days out to Silver members and 297 days ahead to Bronze members at midnight GMT (11 am AEDT). - best for those in Gold.

 

[evanb]

Is this points redeemed on flights, or simply points redeemed? I note in your analysis you've pointed out that points redeemed per member has remained pretty stable since 2019, which makes perfect sense - your stats are right.

But if members are not able to redeem for Classic Rewards, they'll end up spending their points on other products (points+pay, C+, or non-flight products). From this, I don't get how the statistic of "points redeemed per member is similar" can be used refute the premise that there isn't enough Classic Reward availability. The fact that there are more points redeemed in the program overall also doesn't really refute that, for the same reasons. I'm sure there's many people who have points sitting in the account, who want to use them for flights - but they couldn't find availability, so they burned them on a non-Classic Reward redemption. It wouldn't change any of the stats you mention, but it still doesn't mean they found Classic Reward availability.

I just don't think there is enough conclusive evidence, number based or otherwise, to go beyond the anecdotal. Mainly because Qantas won't ever release a proper breakdown. As someone who stares at the Qantas website for multiple hours at least three days a week, I'd personally say I'm seeing less availability than before. Of course, this is purely anecdotal and not backed up by statistics.

Is it impossible to find availability? Definitely not, and I make the program work for me. But I'm also definitely not representative of the average traveller and it would be ridiculous for me to say that it works for everyone as a result.

What difference does it make? You can earn points on non-QF activities, whether those be partner airlines or non-airline partners, so if we only look at a narrow range of redemptions should you then consider that against a narrow range of earnings? If points are fungible in earning they are fungible in spending!

In terms of what flights or rewards people are redeeming on one need to consider the opportunity cost. Some other posters argue that they're redeeming on parter airlines. A big difference between an airline offering a reward on their own metal is that they control the opportunity cost whereas they don't on a partner. People also forget that they don't control partner inventory but also that they must compensate partners when customers redeem on partners (and vice versa).

I'm not sharing that data to refute your point but simply argue that a redemptions have skyrocketed because earnings have skyrocketed because membership has skyrocketed! While we might not be getting what we were, a large number of people are being attracted to the program thereby concentrating it. Without more flights there can't be more rewards offered, hence the price increasing. The point that I'm arguing is that the inherent success via growth of QFF is outstripping supply. That's not sustainable, so prices will increase. That's the headline: too many points chasing too few goods!

 

[Mr H]

The price increasing is simply inflation. Most points are not earned through flying, they are sold to third parties at a supposed rate of 1.1 cents per point. They are redeemed at a rate of 0.6 cents per point*. As the value of flights goes up in dollar terms, the number of points required to redeem for them must also increase.

* this value is obvious from redemptions for gift cards. I presume QF charge their loyalty department for flights. CRs would perhaps be priced at ID90 rate as distressed stock, and C+ might be charged at half retail price.

 

[evanb]

This is true; the airline's official operational success figures are based on these statistics.
The problem is that the statistics are mostly created in such a way that they result in high bonuses for their authors.
However, simple reality shows clearly that for some time now, getting a reward seat in premium class on an international flight has become almost impossible. This has not been the case before.
So what are we to believe in? In printed statistics figures, or in the reality we all encounter first-hand every day?
You only need to read what other program members post in the current thread.
Even the title alone leaves no doubt:
"Latest Changes May Not Fix Qantas’ Reward Availability Problem"
There is a problem. A big one.
Most active QFF loyalty program members see this clearly because they experience it directly.
How will you answer their allegations?
They must be wrong because the official statistics say otherwise?

Your experience may be such, yet 1.2 million more members signed up in the last year and earned 27 billion more miles. They've obviously found reasons to do that, which may include 16 billion more miles redeemed.

This during a period when QF's reputation has been pretty cough. The reality is that not everyone wins and those that don't are more likely to feel aggrieved about it. Every few months we hear reasons why people are going to flee en masse, yet the data show that the net impact is not that. Even worse is that the growth of the program is outstripping its ability to supply (which is bad for customers).

 

[evanb]

The price increasing is simply inflation. Most points are not earned through flying, they are sold to third parties at a supposed rate of 1.1 cents per point. They are redeemed at a rate of 0.6 cents per point*. As the value of flights goes up in dollar terms, the number of points required to redeem for them must also increase.

* this value is obvious from redemptions for gift cards. I presume QF charge their loyalty department for flights. CRs would perhaps be priced at ID90 rate as distressed stock, and C+ might be charged at half retail price.

More than half would be a big over estimation, but the general argument is spot-on.

Average cost per point is about 1.27 cents in FY24. We can estimate this from revenue divided by points earned ($2.573 billion divided by 202 billion). But cost per point varies significantly based on quantity and advanced purchase. It's quite common for major partners (e.g. banks) to buy upfront for significant discounts. Example, in FY23 QF reported free cash flow from loyalty at $1 billion despite EBIT being half that. Suspect this included advance payment from NAB and ANZ. This is also something that isn't often appreciated: airlines can use loyalty programs as cheap financing (Delta have exploited this!).

In terms of redemption, QF's goal is for internal to be profit neutral, not at the ticket level but that earnings and redemptions should broadly cover each other. They won't be priced at ID90 since ID90 is estimated off full fare. The challenge is that there is an opportunity cost since many redemptions (not C+) is inventory available to partners, but that helps price.

In total, loyalty has a 20% margin, meaning that the average cost of redemptions is 1.02 cents. Internal is 0% (conceptually), so one can make some guesses on the rest. If external (including partner airlines) is 50%, then that margin is 40% meaning average cost of redemption is 0.76 cents (not far off from your educated guess, although it's conceivable that the gift cards are very high margin).